For local contractors, a close losing bid may end up a winner

Listen to this article

In bidding on government construction projects in North Carolina, local contractors soon may discover that close is close enough.

Bills moving through the North Carolina General Assembly could give a second shot at a project to a local contractor who appears to lose out to a lower bidder from outside the area.

House Bill 284 and its sister bill, Senate Bill 232, would allow, but would not require, counties and municipalities to give preference to a local builder if two conditions are met:

– The bid of the lowest responsible, responsive local bidder is no more than five percent or $10,000 higher than the bid of the lowest responsible nonlocal bidder

– The local bidder matches the bid of the nonlocal bidder.

A separate bill also offers a potential advantage for local subcontractors.

As of midweek, HB 284 and SB 232 were in legislative committees, SB 232 in the Committee on Rules and Operations of the Senate, HB 284 in the House Committee on Government. HB 284 also will have to clear the House Finance Committee.

The bills cover more than just construction projects. Both also would allow counties and municipalities to give similar preference to local bidders on repair work or purchases of apparatus, equipment and supplies that will be paid for with public money.

If the bills are passed and signed by Gov. Pat McCrory, the law would be effective for bids received on or after July 1.

State Rep. Jonathan Jordan, R-Jefferson, a lawyer and the primary sponsor of HB 284, said in an interview that governments should have the option to allow a local bidder whose bid is close to match a nonlocal bidder’s price.

“Taxpayers will be protected with the lowest price,” Jordan said. “And the local builder pays tremendous local taxes, employs people in the community and often buys from local suppliers.”

Charlotte City Councilman Andy Dulin said that although he is unfamiliar with the specifics of the bills, he would get behind legislation benefitting local businesses.

“I can say that efforts to make and help local businesses in Mecklenburg County and the 100 counties in North Carolina, if it could help local businesses, that would be something I would support,” he said.

But a colleague, City Councilwoman Claire Green Fallon, although acknowledging she too is not familiar with the bills, said providing an opportunity for a local business to match the lowest bid raises questions.

“If you’re allowing (the local business), you have to allow everyone,” she said. “It’s an iffy, iffy question. I’m wondering how legal that is.”

Jordan said he doesn’t want the bills to be misinterpreted.

“The main thing is, it’s just an option,” he said, pointing out that local governments are not required to grant preference to a local bidder.

He also is concerned that out-of-area contractors will be upset.

“I know there will be questions about South Carolina, Tennessee and Virginia in the southern and northern parts of the state,” Jordan said. “It could turn into people thinking we’re not allowing out-of-state people to get contracts. That’s not it, though.”

Jordan said the bill is just meant to benefit the local communities.

Wes Martin, vice president for Charlotte-based contractor Carocon Corp., said he agrees with the sentiments in the bills.

“Preference should be given to a local builder because it would benefit the economy in the local area,” Martin said. “There is a difference between being local and being under-qualified, and I think local contractors are often overlooked.”

BENNETT can be reached at (704) 247-2911, [email protected] or on Twitter at @AbbieRBennett.

Sidebar: GOOD FAITH: Contractors may be required to seek local subs

A bill before the North Carolina General Assembly would require that bidders on public building contracts in North Carolina show they have made “good faith efforts” to recruit local subcontractors for the projects.

As of midweek, Senate Bill 19 was in the Senate Committee on Commerce. State Sen. Stan Bingham, R-Denton, owner of a lumber company, is the primary sponsor.

If passed by both houses of the General Assembly and signed into law by Gov. Pat McCrory, the bill would require bidders to contact local companies that reasonably could have been expected to submit a quote for subcontracting work and that were known to the contractor or available before the bid or proposal date.

Bidders also would have to make the plans, specifications and requirements of the job available for review by local companies and negotiate in good faith with those that are interested.

Bidders would have to submit an affidavit that the good faith efforts were made to recruit locally. Failing to include the affidavit is grounds for rejection of a bid.

The law would be effective for bids received on or after July 1.

Bingham said in an interview that the bill was inspired by a constituent of his who owns a concrete business in Lexington.

“There were several buildings being built and he never even got notice of it,” Bingham said. “He never even got the opportunity to bid on the concrete (for construction of the buildings). He pays city taxes and all the other taxes associated with running a concrete business. It’s not that this gentleman wanted any special treatment. I found it really sad.”

Leveling the playing field for local bidders is the intent of the bill, Bingham said.

“I just want to make sure that if there’s any bidding, cities make every effort to inform (local businesses),” he said. “I don’t think there’s any intentional avoidance of locals; it’s just that if (contractors) are accustomed to sending out bids to so many people, that’s the way they do it. You could call it laziness or whatever, but most haven’t gone through the phone book to see who’s out there and help each other. Why wouldn’t you want to stimulate local business?”

Wes Martin, vice president for Charlotte-based contractor Carocon Corp., said recruiting local businesses as part of a public contract isn’t anything new.

“It’s a typical requirement anyway,” he said. “Housing partnerships always require local and minority percentages (of subcontractors). I deal with that all the time.”

Martin said he doesn’t buy that requiring contractors to recruit local contractors for the public contracts will make a difference for local economies.

“I don’t think, in the end, it’s going to matter a whole lot,” he said. “Contractors are going to pick who is the most qualified for the job. It may be an exercise in vain for businesses or contractors who aren’t qualified.”

– Abbie Bennett